The major protein component in the serum of the developing mammalian fetus is alpha-fetoprotein (AFP), which is synthesized in the embryonic liver and visceral endoderm of the yolk sac. After birth, the rate of synthesis of AFP in liver decreases drastically to levels that are barely detectable in nonpregnant adults. Synthesis of AFP is resumed in adult liver during liver regeneration and in specific tumors such as hepatomas and teratocarcinomas. In contrast, serum albumin, which is the major serum protein synthesized by the adult liver, increases from low levels early in development, to high, relatively constant levels after birth and in adult life. These serum proteins arose in evolution as the consequence of a gene duplication and are tightly linked in tandem on chromosome 5 in mice. Two transacting regulatory genes that affect AFP, but not albumin, transcription in developing liver have been described genetically. These genes recently have been shown to be pleiotrophic in that they affect transcription of other unlinked genes in addition to AFP. We are currently developing genetic and biochemical assays for the products of these regulatory genes that will allow us to isolate them and determine their mode of action. At the same time, the DNA sequences required for tissue-specific transcription of the AFP and albumin genes in vivo, using DNA-mediated gene transfer into both F9 teratocarcinoma cells and fertilized mouse eggs, are being identified. (M)